Today the Board of Directors of the Federal Home Loan Bank of
Indianapolis ("FHLBank Indianapolis" or "Bank") declared its second
quarter 2024 dividends on Class B-2 activity-based capital stock
and Class B-1 non-activity-based stock at annualized rates of 9.50%
and 4.50%, respectively. The higher dividend rate on activity-based
stock reflects the Board's discretion under the Bank's capital plan
to reward members that use FHLBank Indianapolis in support of their
liquidity needs.
"Our latest financial results underscore our solid track record
of success in meeting member liquidity needs, as well as the
innovative ways we support affordable housing and community
development needs through our statutory and increased voluntary
allocations," President and CEO Cindy Konich said.
The dividends will be paid in cash on July 26, 2024.
Earnings Highlights
Net income, for the second quarter of 2024, was $89 million, a
net decrease of $2 million compared to the corresponding quarter in
the prior year. The decrease was primarily due to lower interest
spreads and lower hedging gains on qualifying fair-value hedging
relationships, substantially offset by higher earnings on the
portion of the Bank's assets funded by its capital1.
Net income, for the six months ended June 30, 2024, was $184
million, a net increase of $1 million compared to the corresponding
period in the prior year. The increase was substantially due to
higher earnings on the portion of the Bank's assets funded by its
capital. However, such increase was partially offset by net gains
on the extinguishment of consolidated obligations in the
corresponding period that did not occur in the current period.
_________________________1 FHLBank Indianapolis earns
interest income on advances to and mortgage loans purchased from
its Michigan and Indiana member financial institutions, as well as
on long- and short-term investments. Net interest income is
primarily determined by the size of the Bank's balance sheet and
the spread between the interest earned on its assets and the
interest cost of funding with consolidated obligations. Because of
the Bank's inherent relatively low interest-rate spread, it has
historically derived a substantial portion of its net interest
income from deploying its interest-free capital in floating-rate
assets.
Affordable Housing Program Allocation
The Bank's Affordable Housing Program ("AHP") provides grant
funding to support housing for low- and moderate-income families in
communities served by its Michigan and Indiana members. For the six
months ended June 30, 2024, AHP assessments2 totaled $21 million.
Full-year 2024 required allocations will be available to the Bank's
members in 2025 to help address their communities' affordable
housing needs, including construction, rehabilitation,
accessibility improvements and homebuyer down-payment
assistance.
In addition, as part of the Bank's commitment to further support
its AHP and additional affordable housing, small business and
community investment programs, the Bank has voluntarily allocated
additional funding in 2024 totaling $23 million, based on 5% of its
net earnings for 2023, of which $7 million has been recognized and
is reported in other expenses.
As a result, the Bank's combined required and voluntary
allocation recognized in the six-month period totaled $28 million,
an increase of $1 million, or 6%, compared to the corresponding
period in the prior year.
Condensed Statements of Income
The following table presents unaudited condensed statements of
income ($ amounts in millions):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Interest income(a) |
|
$ |
1,034 |
|
$ |
950 |
|
$ |
2,050 |
|
$ |
1,769 |
Interest expense(a) |
|
|
909 |
|
|
826 |
|
|
1,796 |
|
|
1,542 |
Provision for credit
losses |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Net interest income after
provision for credit losses |
|
|
125 |
|
|
124 |
|
|
254 |
|
|
227 |
Other income(b) |
|
|
6 |
|
|
9 |
|
|
16 |
|
|
39 |
Other expenses |
|
|
32 |
|
|
31 |
|
|
65 |
|
|
62 |
AHP assessments |
|
|
10 |
|
|
11 |
|
|
21 |
|
|
21 |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
89 |
|
$ |
91 |
|
$ |
184 |
|
$ |
183 |
(a) Includes hedging gains (losses) and net interest
settlements on fair-value hedge relationships. The Bank uses
derivatives, specifically interest-rate swaps, to hedge the risk of
changes in the fair value of certain of its advances,
available-for-sale securities and consolidated obligations. These
derivatives are designated as fair-value hedges and, therefore,
changes in the estimated fair value of the derivative, and changes
in the fair value of the hedged item that are attributable to the
hedged risk, are recorded in net interest income.(b) Includes
impact of purchase discount (premium) recorded through
mark-to-market gains (losses) on trading securities and net
interest settlements on derivatives hedging trading securities,
while generally offsetting interest income on trading securities is
included in interest income.
_________________________2 Each year, Federal Home
Loan Banks are required to allocate to the AHP 10% of earnings,
defined for this purpose as income before assessments plus interest
expense on mandatorily redeemable capital stock.
Balance Sheet Highlights
Total assets, at June 30, 2024, were $79.2 billion, a net
increase of $2.6 billion, or 3%, from December 31, 2023.
Advances 3
Advances outstanding, at June 30, 2024, at carrying value,
totaled $36.6 billion, a net increase of $1.0 billion, or 3%, from
December 31, 2023. The par value of advances outstanding
increased by 3% to $37.0 billion, which included a net increase in
short-term advances of 14% and a net decrease in long-term advances
of 1%. At June 30, 2024, long-term advances composed 70% of
advances outstanding, while short-term advances composed 30%.
The par value of advances outstanding to depository institutions
— comprising commercial banks, savings institutions and credit
unions — increased by 3%, while advances outstanding to insurance
companies also increased by 3%. As a percent of total advances
outstanding at par value, at June 30, 2024, advances to
commercial banks and savings institutions were 48% and advances to
credit unions were 14%, resulting in total advances to depository
institutions of 62%, while advances to insurance companies were
38%.
Mortgage Loans Held for Portfolio 4
Mortgage loans held for portfolio, at June 30, 2024,
totaled $9.4 billion, a net increase of $779 million, or 9%, from
December 31, 2023, as the Bank's purchases from its members
exceeded principal repayments by borrowers. Purchases of mortgage
loans, for the six months ended June 30, 2024, totaled $1.2
billion.
Liquidity Investments 5
Liquidity investments, at June 30, 2024, totaled $12.8
billion, a net increase of $649 million, or 5%, from
December 31, 2023. Our liquidity remained well above
regulatory requirements and continues to enable the Bank to be a
reliable liquidity provider to its members.
Cash and short-term investments increased by $172 million, or
1%, to $11.7 billion. The portion of U.S. Treasury obligations
classified as trading securities increased by $477 million, or
79%, to $1.1 billion. As a result of this activity, cash and
short-term investments represented 92% of the total liquidity
investments at June 30, 2024, while U.S. Treasury obligations
represented 8%.
Other Investment Securities
Other investment securities, which consist substantially of
mortgage-backed securities and U.S. Treasury obligations classified
as held-to-maturity or available-for-sale, at June 30, 2024,
totaled $19.7 billion, a net increase of $205 million, or 1%, from
December 31, 2023.
_________________________3 Advances are secured loans that
the Bank provides to its member institutions. 4 The Bank
purchases mortgage loans from its members to support its housing
mission, provide an additional source of liquidity to its members,
and diversify its investments. 5 The Bank's liquidity
investments consist of cash, interest-bearing deposits, securities
purchased under agreements to resell, federal funds sold and U.S.
Treasury obligations.
Consolidated Obligations 6
FHLBank Indianapolis' consolidated obligations outstanding, at
June 30, 2024, totaled $73.2 billion, a net increase of $2.1
billion, or 3%, from December 31, 2023, which reflected
increased funding needs associated with the net increase in the
Bank's total assets.
Capital 7
Total capital, at June 30, 2024, was $4.0 billion, a net
increase of $242 million, or 6%, from December 31, 2023. The
net increase resulted from the growth in retained earnings,
increase in accumulated other comprehensive income and issuances of
capital stock to support advance activity.
The Bank's regulatory capital-to-assets ratio8, at June 30,
2024, was 5.47%, which exceeds all applicable regulatory capital
requirements.
_________________________6 The primary source of funds for
FHLBank Indianapolis, and for the other FHLBanks, is the sale of
FHLBanks' consolidated obligations in the capital markets. FHLBank
Indianapolis is the primary obligor for the payment of the
principal and interest on the consolidated obligations issued on
its behalf; additionally, it is jointly and severally liable with
each of the other FHLBanks for all of the FHLBanks' consolidated
obligations outstanding.7 FHLBank Indianapolis is a
cooperative whose member financial institutions and former members
own all of its capital stock as a condition of membership and to
support outstanding credit products.8 Total regulatory
capital, which consists of capital stock, mandatorily redeemable
capital stock and retained earnings, as a percentage of total
assets.
Condensed Statements of Condition
The following table presents unaudited condensed statements of
condition ($ amounts in millions):
|
|
June 30, 2024 |
|
December 31, 2023 |
Advances |
|
$ |
36,556 |
|
|
$ |
35,562 |
|
Mortgage loans held for
portfolio, net |
|
|
9,393 |
|
|
|
8,614 |
|
Liquidity investments |
|
|
12,801 |
|
|
|
12,152 |
|
Other investment
securities(a) |
|
|
19,656 |
|
|
|
19,451 |
|
Other assets |
|
|
839 |
|
|
|
829 |
|
|
|
|
|
|
Total assets |
|
$ |
79,245 |
|
|
$ |
76,608 |
|
|
|
|
|
|
Consolidated obligations |
|
$ |
73,190 |
|
|
$ |
71,053 |
|
MRCS |
|
|
363 |
|
|
|
369 |
|
Other liabilities |
|
|
1,706 |
|
|
|
1,442 |
|
Total liabilities |
|
|
75,259 |
|
|
|
72,864 |
|
|
|
|
|
|
Capital stock(b) |
|
|
2,345 |
|
|
|
2,285 |
|
Retained earnings(c) |
|
|
1,624 |
|
|
|
1,532 |
|
Accumulated other
comprehensive income (loss) |
|
|
17 |
|
|
|
(73 |
) |
Total capital |
|
|
3,986 |
|
|
|
3,744 |
|
|
|
|
|
|
Total liabilities and
capital |
|
$ |
79,245 |
|
|
$ |
76,608 |
|
|
|
|
|
|
Total regulatory
capital(d) |
|
$ |
4,332 |
|
|
$ |
4,186 |
|
|
|
|
|
|
Regulatory capital-to-assets
ratio |
|
|
5.47 |
% |
|
|
5.46 |
% |
(a) Includes held-to-maturity and available-for-sale
securities.(b) Putable by members at par
value.(c) Includes restricted retained earnings, at
June 30, 2024 and December 31, 2023, of $435 million and
$398 million, respectively.(d) Consists of total capital less
accumulated other comprehensive income plus mandatorily redeemable
capital stock.
All amounts referenced above are unaudited. More detailed
information about FHLBank Indianapolis' financial condition as of
June 30, 2024, and its results for the three and six months
then ended, will be included in Management's Discussion and
Analysis of Financial Condition and Results of Operations in the
Bank's Quarterly Report on Form 10-Q.
Safe Harbor Statement
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 concerning plans, objectives, goals, strategies, future events
and performance. Forward-looking statements can be identified by
words such as "will," "believes," "may," "temporary," "estimates,"
and "expects" or the negative of these words or comparable
terminology. Each forward-looking statement contained in this news
release reflects FHLBank Indianapolis' current beliefs and
expectations. Actual results or performance may differ materially
from what is expressed in any forward-looking statements.
Any forward-looking statement contained in this news release
speaks only as of the date on which it was made. FHLBank
Indianapolis undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by law.
Readers are referred to the documents filed by the Bank with the
U.S. Securities and Exchange Commission, specifically reports on
Form 10-K and Form 10-Q, which include factors that could cause
actual results to differ from forward-looking statements. These
reports are available at www.sec.gov.
Building Partnerships. Serving
Communities.FHLBank Indianapolis is a regional bank
included in the Federal Home Loan Bank System. FHLBanks are
government-sponsored enterprises created by Congress to provide
access to low-cost funding for their member financial institutions,
with particular attention paid to providing solutions that support
the housing and small business needs of members' customers.
FHLBanks are privately capitalized and funded, and receive no
Congressional appropriations. FHLBank Indianapolis is owned by its
Indiana and Michigan financial institution members, including
commercial banks, credit unions, insurance companies, savings
institutions and community development financial institutions. For
more information about FHLBank Indianapolis, visit www.fhlbi.com.
Also, follow the Bank on LinkedIn, as well as Instagram and X at
@FHLBankIndy.
Contact: Scott Thien |
Senior Internal Communications Lead |
sthien@fhlbi.com | 317-902-3103 |
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/4f7e04af-6f23-45fe-8a0d-194822b26f34